Classification of employees versus independent contractors is important for several notable reasons. Employees are entitled to statutory benefits and protections under the Employment Standards Act (ESA) such as minimum wage, notice of termination, severance pay and overtime pay. Independent contractors enjoy no such entitlements under the Employment Standards Act for these benefits and protections.
In late-2017, the Ontario government amended several aspects of the ESA in the form of the Fair Workplaces, Better Jobs Act, also known as Bill 148. Particularly notable was Bill 148’s tightening of the law with respect to who should be classified as an employee. For employers who misclassified employees as independent contractors, Bill 148 shifted the onus to the business, rather than the employee, to prove that the individual is not an employee in the event a dispute arises over the classification.
On November 21, 2018, the Ontario government reversed many of Bill 148’s changes to the ESA through the Making Ontario Open for Business Act. This included changes to the burden of proof with respect to classification of employees versus independent contractors. Now, the ‘reverse onus’ in Bill 148 that placed the burden of proof on an employer to prove the proper classification of a particular person has been repealed. An individual, as was the case prior to Bill 148, once again carries the burden of proof with respect to proving whether that person is an employee rather than an independent contractor.
While businesses are certainly thankful for these changes, employees should be proactive and exercise caution in reviewing employment contracts in order to ensure they have been classified properly, either as an employee or as an independent contractor. In the event of misclassification, employees are once again responsible for proving the misclassification, making it extremely important for individuals to avoid such disputes whenever possible.